With Aereo appeal, broadcasters threaten the foundation of locker services

After losing in court earlier this month, the broadcasters trying to shut down TV streaming startup Aereo are asking for another chance to make their case. This time, their aims are broader. They warn of dire economic consequences if a broader panel of judges from the Second Circuit Court of Appeals doesn't reconsider the previous decision, which was decided by a narrow 2-1 margin.

Aereo's technology is designed to take advantage of a landmark 2008 ruling by the Second Circuit, based in New York. It held that a "remote DVR" service designed by Cablevision was legal because it kept a separate copy of a program for each user who recorded it. Reasoning that the same principle should apply to broadcast television, Aereo built a television streaming service with thousands of tiny antennas. Aereo claims that because it assigns each active user an individual antenna, and stores separate copies of recorded programs, it isn't infringing copyright holders' public performance rights.

On April 1, two judges from the Second Circuit accepted Aereo's argument, ruling that its service was no different, legally speaking, from renting a TV tuner with a really long cable. But Judge Denny Chin dissented, described Aereo's technology as "a Rube Goldberg-like contrivance, over-engineered in an attempt to to avoid the reach of the Copyright Act."

Now broadcasters are asking for the case to be reheard by an "en banc" panel consisting of all Second Circuit judges. The broadcasters hope that Judge Chin's argument will carry the day on the larger panel.

The company's existence, and the future of many other cloud-based businesses, hangs in the balance. Aereo's entire business strategy relies on Cablevision's 2008 legal victory, and the broadcasters are asking the appeals court to overturn it.

High stakes

Right now, cable and satellite companies pay broadcasters for licenses to re-transmit their content. The broadcasters warn that the Aereo ruling "will swallow the entire retransmission licensing regime. Cable and satellite companies like Time Warner Cable and Dish Network are already threatening to partner with Aereo or use Aereo-like set-ups. And broadcasters, faced with losing a revenue stream critical to supporting free, over-the-air television, have been forced to consider converting their broadcast networks to subscription-based cable channels."

The broadcasters believe that the fundamental problem with Aereo can be traced back to reasoning of the Cablevision decision. Broadcasters say that when a company like Cablevision or Aereo transmits multiple copies of the same work to different customers, that should be considered a public performance regardless of whether the content was received by different antennas, stored as separate copies, or transmitted to customers at different times.

The broadcasters couldn't directly attack the Cablevision ruling during its earlier appeal because only a full en banc panel has the power to overturn earlier precedents. The three-judge panel that handed down this month's decision was bound to apply the Cablevision ruling whether they agreed with it or not. But the full Second Circuit has the option to overturn earlier precedents.

"Cablevision’s statutory analysis was plainly wrong," the broadcasters now argue. They say it would make no sense for Congress to set up a scheme for licensing retransmission of broadcast television content while allowing companies like Aereo to circumvent that licensing regime with a technical gimmick.

A coalition of major studios, unions, and other groups connected to the film industry also filed an amicus brief in the case to encourage the Second Circuit to re-hear the case. They don't urge the Second Circuit to overturn Cablevision, but they argue for a narrower interpretation of the ruling.

"The Majority could have found that Cablevision’s examination of the legality of the RS-DVR functionality as part of an otherwise licensed service was factually distinguishable, since Aereo’s mass retransmission activities are conducted without any authorization from copyright owners," Hollywood said in its brief.

"A weird result"

Ars talked to James Grimmelmann, a visiting professor at Georgetown Law School, about the broadcasters' request. He agreed with the broadcasters that "we're getting into a weird result that it's not clear Congress intended."

However, he said, "you have to work with the definitions Congress actually gives you." The fundamental problem, in his view, is that Congress's definition of a public performance is "not really susceptible to any coherent interpretation. The unique copy rule [from Cablevision] at least gives you a coherent rule."

In the last five years, the Cablevision decision has become the legal foundation for cloud storage services such as Google Music and Amazon Cloud Player. Many different users of those services upload copies of the same song. If transmitting the same song to multiple users constitutes a "public performance," then Google and Amazon would need licenses from the publisher of any song that more than one user uploaded. In practice, that would mean music locker sites couldn't exist.

Overruling Cablevision could be "tremendously disruptive," Grimmelmann told us. And according to Grimmelmann, even Hollywood's narrower interpretation of Cablevision could prevent online locker services from offering streaming capabilities.

Grimmelmann is ambivalent about the possibility that Aereo could undermine free, over-the-air television. "One might question whether free over-the-air television is a good use of spectrum," he told us.

But Judge Denny Chin dissented, described Aereo's technology as "a Rube Goldberg-like contrivance, over-engineered in an attempt to to avoid the reach of the Copyright Act."

Isn't that just a way of saying they aren't violating the Copyright Act?

This is just another matter of content providers and "owners" claiming that technology is bad and is destroying America.I can bet a striking down of the Cablevision ruling would encourage content stakeholders to go after every other recording/rebroadcasting technology.

You don't like the deal anymore where we the people give you spectrum and you provide a service in the form of OTA entertainment and news while making money? Fine, we'll take the spectrum back back and use it for something else.

I remember thinking that it would take decades for the archaic business model that is broadcast television to finally die. If Aereo manages to kill it in the next few years, that would be absolutely fantastic.

Think about the innovations in the wireless/mobile space in the past few years. Now compare that to broadcast television, which is substantially the same as what it was in the 1940s: generally crappy, homogenized content delivered at set times of the day with ad-based support. The broadcast model is terrible for consumer choice, because it requires that any given show have an enormous viewership to justify using up 100% of the available bandwidth to stream it to everyone simultaneously. The only content that everyone is willing to watch is, generally, of relatively middling quality.

Let the broadcasters die, move to a pay-per-view/Netflix model, repurpose their absurdly wasteful use of spectrum to the wireless broadband carriers (who for all of their faults certainly have innovated), and watch the quality and variety of content expand by orders of magnitude.

They say it would make no sense for Congress to set up a scheme for licensing retransmission of broadcast television content while allowing companies like Aereo to circumvent that licensing regime with a technical gimmick.

These lawyers don't seem to know the history of what they're arguing against. Congress actually did set up a regime specifically to deny licensing funds to the OTA channels back when cable was new and the OTA providers could leverage their market position to squeeze cable out of the picture. That's the whole history behind 'Must Carry'. The negotiation requirement (which effectively eliminates Must Carry) only came after cable companies had established themselves and were in an equal position, and thus able to negotiate with the OTA providers on equal footing.

If anything Congress should specifically provide internet "carriers" similar 'Must Carry' provisions for all channels (whether or not they're OTA) in order to balance out the position of strength the existing providers can negotiate in. The courts should absolutely not overturn Cablevision as the net effect is identical to how 'Must Carry' worked in the early days of cable.

Edit: Welp, looks like I'm somewhat backwards on my own understanding of the history. The non-charge component of must carry was a side effect that was later superceded by forced retransmission negotiations. Must carry itself was to force cable companies to keep OTA channels on their wires as they grew. In turn they couldn't be charged for retransmission (for a time).

Oh well, the gist of my reasoning stands (I think): the OTA networks are in a position of power that prevents innovation. The innovators should be allowed to ignore copyright law, to a certain extent, until they get large enough to have equal negotiating power.

Maybe I'm in the minority here, but I get all my TV over the air. We don't have cable (and won't pay the ever-rising costs) and without cable, have very little choice wrt broadband (slow DSL is all we can get). So, what would we do for TV programming if, as so many of you seem to delight in, over the air TV were to die? Great (or neutral) for those with $$ and access to fast broadband, not so great for others.

What I don't get is that when cable started becoming a huge deal back in the 80s, the major selling point was that you were paying for your television service so you didn't have to watch commercials, yet we still see commercials on nearly every TV station. Aren't the broadcasters already getting paid enough from that revenue stream? Were we lied to 35 years ago? Or have I misunderstood the entire situation?

You don't like the deal anymore where we the people give you spectrum and you provide a service in the form of OTA entertainment and news while making money? Fine, we'll take the spectrum back back and use it for something else.

In an ideal world that's exactly what would happen, but they want to have their cake and eat it too.

The spectrum is valuable and they don't want to give it up for anything (they have an extreme sense of entitlement to it, bordering on feeling like they own it) but they don't want to do what is in the public's interest in exchange for it. <10% of the public actually benefits from it, put it to better use so >80% can get use from it.

Can someone please explain to me why the broadcasters even care? These are OTA signals that they were already giving away for free.

Because something like 80% of the public watches the OTA channels over cable. Which they do get paid for the re-transmission from. They're afraid of Aereo succeeding and the cable companies looking for an elimination of forced retransmission negotiations and a return to the free Must Carry days.

They're also concerned about pissing off their local affiliates when people from wherever can watch programming from somewhere else and thus cause local advertising value to drop.

Well Aereo is not violating the letter of the law, but it certainly is questionable that they are violating the spirit of the law. The problem is that the letter of the law generally carries more weight. And on a personal note, I haven't even seen broadcast tv in years. OTA or cable, the whole notion of watching on their schedule is going the way of the dinosaur.

Society (in the US) is generally squeezing the average worker more and more and when we do have time to watch TV I sure as hell do not want to spend ~30% of my time watching commercials, so I don't.

Maybe I'm in the minority here, but I get all my TV over the air. We don't have cable (and won't pay the ever-rising costs) and without cable, have very little choice wrt broadband (slow DSL is all we can get). So, what would we do for TV programming if, as so many of you seem to delight in, over the air TV were to die? Great (or neutral) for those with $$ and access to fast broadband, not so great for others.

As I understand it, the major fight is only coming from the "Big Networks" (CBS, ABC, NBC) that are really only broadcasting a few hours a day. The rest of the day is entirely local programming (either syndicated shows and\or local programming). Again, it's my understanding they are the ones that are threatening to go cable-only and so you'd miss first run of Dancing With the Stars and other quality programs such as that.

Maybe I'm in the minority here, but I get all my TV over the air. We don't have cable (and won't pay the ever-rising costs) and without cable, have very little choice wrt broadband (slow DSL is all we can get). So, what would we do for TV programming if, as so many of you seem to delight in, over the air TV were to die? Great (or neutral) for those with $$ and access to fast broadband, not so great for others.

As I understand it, the major fight is only coming from the "Big Networks" (CBS, ABC, NBC) that are really only broadcasting a few hours a day. The rest of the day is entirely local programming (either syndicated shows and\or local programming). Again, it's my understanding they are the ones that are threatening to go cable-only and so you'd miss first run of Dancing With the Stars and other quality programs such as that.

Edit: Mental note: Check preview first.

That would result in OTA programming dying. Local affiliates cannot survive on local ads alone.

The broadcasters get their money from two places. One from licensing to caber companies, and the other is ad revenue, based on ratings. If the aero stuff is considered ota, then those viewers should be included in the rating/ad revenue discussion. Eyeballs are eyeballs.

The ones at risk are the cable companies that charge for the rebroadcast the signal to those that subscribe to their cable network.

The old model won't work in the new world. If ota is going to get ad money based on viewers, then all ota viewers should be counted. If cable people want money from people to subscribe to their service, then they need to offer features and pricing that provide value.

The fact that this new method of viewing may damage an existing business model is something they simply need to deal with. Remember passenger trains?

After losing in court earlier this month, the broadcasters trying to shut down TV streaming startup Aereo are asking for another chance to make their case. This time, their aims are broader. They warn of dire economic consequences if a broader panel of judges from the Second Circuit Court of Appeals doesn't reconsider the previous decision, which was decided by a narrow 2-1 margin.

I'm confused as to how they have any standing to appeal for a second time. They went to trial court...and lost. They went to the court of appeals...and lost. I thought after that it was SCOTUS or nothing.

After losing in court earlier this month, the broadcasters trying to shut down TV streaming startup Aereo are asking for another chance to make their case. This time, their aims are broader. They warn of dire economic consequences if a broader panel of judges from the Second Circuit Court of Appeals doesn't reconsider the previous decision, which was decided by a narrow 2-1 margin.

I'm confused as to how they have any standing to appeal for a second time. They went to trial court...and lost. They went to the court of appeals...and lost. I thought after that it was SCOTUS or nothing.

Maybe someone with more legal experience than me could elaborate?

This is a standard part of the appeals process. First your appeal is heard by a 3-judge panel, and then you have the option to appeal for en banc review before going to the Supreme Court. Appeals courts don't always agree to re-hear cases en banc, but there's nothing unusual about requesting it. If the Second Circuit refuses to hear the case en banc (or takes the case and rules against them) then the broadcasters can appeal to the Supreme Court.

What I don't get is that when cable started becoming a huge deal back in the 80s, the major selling point was that you were paying for your television service so you didn't have to watch commercials, yet we still see commercials on nearly every TV station. Aren't the broadcasters already getting paid enough from that revenue stream? Were we lied to 35 years ago? Or have I misunderstood the entire situation?

As I have always heard it, that was the claim, but as far as I can remember it has never been the reality.

If the cable companies are going to use Aereo to "broadcast" OTA channels without paying licensing fees, nobody's putting guns to the networks' heads to make them license out their cable channels to those companies.

But that would involve letting an actual free market decide things, and we can't have that! It's un-American. Bring in the lawyers!

So what is Congress' definition of a public performance? The broadcasters seem to be arguing that if there is a work, and it is at all being transmitted to someone else then it is public. It essentially seems that they want the definition to be that "private" would only include a person watching a work that they personally have a copy of.

fishsandwich wrote:

Well Aereo is not violating the letter of the law, but it certainly is questionable that they are violating the spirit of the law. The problem is that the letter of the law generally carries more weight.

My assumption would be that the "letter" of the law carries more weight because that is what has been agreed to and is stated explicitly. The "spirit" of the law can introduce judgement of what a person feels like the law should cover and would change based on the Judge. If the letter of the law does not do what it was intended, then you change the letter of the law.

What I don't get is that when cable started becoming a huge deal back in the 80s, the major selling point was that you were paying for your television service so you didn't have to watch commercials, yet we still see commercials on nearly every TV station. Aren't the broadcasters already getting paid enough from that revenue stream? Were we lied to 35 years ago? Or have I misunderstood the entire situation?

As I have always heard it, that was the claim, but as far as I can remember it has never been the reality.

Even the few premium digital cable stations that weren't entirely commercial laden when introduced are starting to get dragged down with them.

I think we're at the point where we should just take all the OTA spectrum away from TV stations and give it to the wireless providers with heavy regulation so they are forced to provide cheap and fast internet. The major networks will do just fine selling their stuff online, and the local stations can compete against all the other amateur content creators on youtube that frankly, put them to shame.

And broadcasters, faced with losing a revenue stream critical to supporting free, over-the-air television, have been forced to consider converting their broadcast networks to subscription-based cable channels."

I say go for it! Imagine what we could do with all that unused spectrum!

Maybe I'm in the minority here, but I get all my TV over the air. We don't have cable (and won't pay the ever-rising costs) and without cable, have very little choice wrt broadband (slow DSL is all we can get). So, what would we do for TV programming if, as so many of you seem to delight in, over the air TV were to die? Great (or neutral) for those with $$ and access to fast broadband, not so great for others.

How slow is your DSL?

4mbit is fine for live viewing, and everything else, you can just download and watch at your leisure.

Timothy B. Lee / Timothy covers tech policy for Ars, with a particular focus on patent and copyright law, privacy, free speech, and open government. His writing has appeared in Slate, Reason, Wired, and the New York Times.